CANADA STOCKS-TSX retreats as energy stocks pressured by oil prices

TORONTO, Oct 12 (Reuters) - Canada’s main stock index pulled back from a 7-1/2-month high on Thursday with broad declines led by energy stocks under pressure from weaker oil prices.

Suncor Energy Inc was the biggest drag on the index, falling 2.2 percent to C$42.06. It was followed by Canadian Natural Resources Ltd, which declined 2 percent to C$40.66.

The overall sector retreated 1.7 percent, as oil prices fell. A bearish 2018 outlook for oil demand by the International Energy Agency weighed on the market. U.S. crude prices settled down 1.4 percent at $50.60 a barrel.

The retreat comes amid a backdrop of uncertainty surrounding the North American Free trade Agreement, with negotiations on the pact turning increasingly sour and talks of a “sunset clause” that would automatically terminate NAFTA every five years unless there were fresh negotiations.

“The market doesn’t like change, so I think it would be perceived initially as negative,” said Michael Sprung, president at Sprung Investment Management about the potential impact of such a clause.

“But we do a lot of cross border trade. I can’t see how in the long-term that’s going to change very much ... I really think things would adjust.”

On the positive side, Alimentation Couche Tard Inc rose 3.9 percent to C$61.24. The company is buying back 4.4 million of its shares that were held by Metro Inc and Eight Capital upgraded the company to a “buy” from “neutral,” citing positive trends. The overall consumer staples sector added 0.7 percent.

Declining issues outnumbered advancing ones on the TSX by 151 to 93, for a 1.62-to-1 ratio on the downside. (Reporting by Solarina Ho; Editing by Bernadette Baum and Lisa Shumaker)